Years ago, I was having dinner with a good friend and brilliant technical consultant. At the time, he was working for a Sun Microsystems value added reseller (or “VAR”). We had worked together at Sun over the years before the Oracle acquisition and he had moved on to greener IT pastures. Or so he thought. Over a steak dinner at the Proud Bird by LAX, I was catching up with my old friend.
“So, how is it going to work for a VAR instead of an ISV?”
“You are mistaken, I work for a VSR now.”
“VSR?”
“Value Subtracted Reseller, the opposite of a Value Added Reseller.”
One of the things I admire to this day about my friend is his impeccable timing of a deadpan quip. I didn’t have to think much about what he said and I almost knew exactly what was coming next. Having been on the ISV side and now on the partner side, he had obtained a different perspective as to what happens in the trenches of IT customer acquisition and service.
As the conversation unfolded, my friend went through the litany of VSR issues pertaining to making feature promises in the sales cycle that did not exist to close the deal, overpromising and under scoping a services engagement, and losing the entire support of the sales team after the deal closed and everyone made their quota. At the time, I kinda understood what he was saying, but for me I was still somewhat insulated deep within the services ranks of Sun Microsystems. As it turns out, more customers are dissatisfied than their business partners might realize. A 2021 study suggested 96% of dissatisfied customers never complain. Instead they will look for an alternative provider giving no indication that anything was significantly wrong
Fast forward 20 years and my IT career has taken me through every aspect of the ISV relationship. Since Sun Microsystems, I spent many years as a customer of ISVs and have had my fair share of working with a VAR as we were either too small or did not purchase enough product to warrant a direct enterprise IT relationship. My experience with purchasing through a VAR for the most part has been good. I have always approached strategic IT buying through an RFP process, albeit a smaller version that actually achieved the intended results of identifying the best bidder.
In the latest iteration of my IT career, I lead a VAR representing Red Hat, an ISV, and have the fortunate opportunity to now see these transactions through every side. While not deliberate, I now find myself intuitively understanding how to align all the incentives of a software sale between the customer, the VAR, and the ISV.
I tell our prospects all the time that I sell the way I liked to be sold when I was in their shoes. Having been in all 3 sets of shoes, I believe we at Stone Door Group have developed a very clear perspective on how to get this VAR thing right. Below are a couple insights we have gleaned along the way.
Insight 1 - Be Honest and Forthright, Even If It Hurts
If you did not come from a career in IT, especially Linux IT culture, then they may not understand the deeply skeptical “prove it to me” posture of an IT buyer. It is impossible to be successful in IT without a rigid commitment to quantitative and qualitative analysis. Systems engineers have to be logical, detail oriented, studious, and get in the weeds. It is very hard in IT culture to fake anything, because ultimately the systems underneath you will be very truthful.
When it comes to selling to the IT crowd, they only see a potential technology solution through a set of requirements that either do or don’t work. If you tell them that your software does meet a requirement, then be prepared to show it. The quickest way to lose an IT buyer is to try to “use the force” and convince them that something works without evidence.
“These aren’t the Droids you are looking for…”
What an IT buyer does respect is honesty, competence and evidence. If you come into a sale with all 3, you transition from a salesman to a fellow sojourner trying to solve their problem with them.
A study from Trust Radius revealed that the top things customers want from IT vendors include transparency in pricing (81%) and to have a clear idea of what the product is before a sales call. They want much more choice and information about their products and value those vendors who offer this. I often call this approach “selling by not selling” because the value transitions from the features of the software to the fact that YOU, the Value Added Reseller can…add value…by lending your experiences and expertise to the IT buyer's problem and working together to see if there is a solution here.
And what if there isn’t a solution?
No problem. As an IT buyer knows, there is nothing worse than sticking your neck out for a budget and staking your credibility with a boss only to end up with shelfware or worse, a hot garbage fire (which is the more evil twin of a dumpster fire) of a failed IT implementation.
Insight 2 - Take the Long View
There is a reason why there is a multi-billion dollar “Customer Relationship Manager” software business. Emphasis on a Relationship. A relationship builds trust and trust takes time. Pushing a customer into a deal to make your quota and worse off, putting together a bad deal that only benefits you is the antithesis of a relationship.
Maybe we can’t help ourselves, but we’re a bunch of nerds at Stone Door Group and we care. There is something about the nerdy camaraderie of getting a RasberryPI to do unnatural things or hacking a Tesla. Maybe we were all picked on for playing clarinet and listening to Rush in high school and that made us appreciate and value the loyalty of a good friend. Whatever it is, we take Value Added Reseller very seriously and we can’t help ourselves but to build a long term and trustworthy relationship.
How do you build that relationship? It’s pretty simple. Realize a relationship has to involve someone else. You have a renewal coming up in the future. The renewal is what binds the commercial relationship together. To renew the software, the customer must believe the investment produces business value. So, help them achieve business value. It doesn’t have to be rocket science.
Insight 3 - Care
The whole basis of free market capitalism is the idea of exchanging currency, goods and services for value. Core to the Stone Door Group ethos is the concept of “Valuable Outcomes”. The way we see it, it is the only thing we sell. A valuable outcome is a customer receiving what they expected on time, within budget, and delivered politely and professionally for the price they paid.
The only way to do this is to simply care. One of our customer relationship tools is to “put the shoe on the other foot” and see what our customer sees. From there, we align incentives. I know this is a buzzword thrown around, but at Stone Door Group this means something. The process of aligning incentives forces us to have to care about what our customer and the ISV cares about and work towards a solution where everyone gets a valuable outcome.
Conclusion
ISVs go through great lengths to build Value Added Reseller programs through training, workshops, conferences, trial software, and training. We are voracious consumers of Red Hat partner enablement. The VAR channel is how most customers get access to enterprise software. We in the VAR channel owe it to our customers to be honest, build a long term relationship and care.
If you are a Red Hat customer with a pending renewal and you want more out of your VAR relationship or think you are currently saddled with a VSR or need rescue from a potential hot garbage fire, check out Stone Door Group’s Red Hat Renewal+ Accelerator. We’d love to meet you.
About the Author
Darren Hoch is a Managing Partner for Stone Door Group, an IBM and Red Hat Apex partner, that specializes in enterprise DevOps cloud engineering solutions. Stone Door Group helps enterprises of all sizes with their digital transformation initiatives. To talk to Darren and learn more how Stone Door Group can help, drop us a line at: letsdothis@stonedoorgroup.com.